Correlation Between CDN IMPERIAL and Cellink AB

Can any of the company-specific risk be diversified away by investing in both CDN IMPERIAL and Cellink AB at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CDN IMPERIAL and Cellink AB into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CDN IMPERIAL BANK and Cellink AB, you can compare the effects of market volatilities on CDN IMPERIAL and Cellink AB and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CDN IMPERIAL with a short position of Cellink AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and Cellink AB.

Diversification Opportunities for CDN IMPERIAL and Cellink AB

-0.74

Correlation Coefficient

CDN IMPERIAL  Cellink AB

Pay attention - limited upside

The 3 months correlation between CDN and Cellink is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK and Cellink AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cellink AB and CDN IMPERIAL is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CDN IMPERIAL BANK are associated (or correlated) with Cellink AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cellink AB has no effect on the direction of CDN IMPERIAL i.e., CDN IMPERIAL and Cellink AB go up and down completely randomly.

Pair Corralation between CDN IMPERIAL and Cellink AB

Assuming the 90 days trading horizon CDN IMPERIAL BANK is expected to generate 0.19 times more return on investment than Cellink AB. However, CDN IMPERIAL BANK is 5.3 times less risky than Cellink AB. It trades about 0.01 of its potential returns per unit of risk. Cellink AB is currently generating about -0.06 per unit of risk. If you would invest  6,143  in CDN IMPERIAL BANK on October 26, 2024 and sell it today you would earn a total of  7.00  from holding CDN IMPERIAL BANK or generate 0.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CDN IMPERIAL BANK  vs.  Cellink AB

CDN IMPERIAL BANK

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CDN IMPERIAL BANK are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, CDN IMPERIAL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cellink AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cellink AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CDN IMPERIAL and Cellink AB

The main advantage of trading using opposite CDN IMPERIAL and Cellink AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDN IMPERIAL position performs unexpectedly, Cellink AB can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cellink AB will offset losses from the drop in Cellink AB's long position.

The idea behind CDN IMPERIAL BANK and Cellink AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.